Micron Disappoints on Revenue Outlook

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It was not a problem in the last few quarters. AI companies crushed them. However, Micron Technology shook investors last evening after its revenue outlook failed to top estimates. Tech companies led the recent rally while other sectors struggled to follow. So, some analysts begin to wonder if Micron’s modest outlook might be a preview of slowing demand for tech products down the road. If that’s the case, it wouldn’t be good since the rally is heavily weighted in tech stocks. - “The stock market is way too reliant on big tech — period and end of story,” said David Bahnsen at The Bahnsen Group. - “Whether or not the past week’s volatility in tech is the start of something deeper or if that reckoning is still forthcoming remains to be seen, but excessive investor sentiment, euphoria and overdone momentum always ends the same.” David Bahnsen at The Bahnsen Group (Photo: CNBC) Take a look at the chart below. You can see how the percentage of members trading above the 200-day moving average declined since the beginning of 2024. However, the S&P 500 continued to rise. Meaning? A small number of stocks (like Nvidia) were responsible for the bulk of the market’s gains. (Source: Bloomberg) Big Tech still expects to post strong growth rates during the next earnings season. Strategas forecasts the Magnificent Seven to grow its net income by 27.6%. It’d be a deceleration from 52.5% in the first quarter However, the firm sees the S&P 500 excluding the Magnificent Seven to bounce back in the third quarter with a 12.9% growth. If that’s the case, it’ll deliver a much-needed diversity in growth to the S&P 500. (Source: Strategas) So, here’s the question… Can the stock market hold up in the next few weeks when Big Tech stocks come back to Earth? It’s something that investors will pay attention to. A Top Turnaround Company to Play the Growing Casino Market Today’s Stock Pick: Light & Wonder (LNW) You might never heard of this company. However, if you love to play casinos, you may have played at least one of its games. Light & Wonder makes games that you see in casinos. The company is divided into three key areas — land-based gaming, SciPlay, and iGaming. They all relate to each other. A slot machine at a physical casino location can also be played on a mobile phone. (Source: Light & Wonder) Like Disney, the company holds a strong portfolio of powerful brands in the industry. For example, it owns Monopoly-themed games. There are even games under Willy Wonka and The Wizard of Oz brands. 777 Blazing is also a huge brand in this space. (Source: Light & Wonder) This is a fast-growing business. Casinos are becoming more accessible to the public. Chicago is building a Bally’s casino in the downtown area. That was previously unthinkable. Sure enough, gross gaming revenue grew steadily since 2003: (Source: Light & Wonder) Light & Wonder benefited a lot from the growing market. Take SciPlay as an example. It is the “social casino” division of the company. What is it? It is online games that mirror real-life casino games but don’t offer any financial winnings. The company makes money by running ads. Now, its revenue growth rate was a whopping 44.5% CAGR since 2012! More importantly, SciPlay grew 2x faster than the social casino market. Meaning? The company is dominating in this space. (Source: Light & Wonder) The company recently transformed itself to become a better investment story. It used to be an asset-heavy company with high debt levels. Not anymore. It focused on content, where it makes awesome games for casinos. It led to strong recurring revenues. Its net leverage ratio plunged from 6.4x to 2.9x. So, it means more cash to shareholders. (Source: Light & Wonder) What about the company’s future? Well, the company’s addressable market is large. It owns only ~19% of the market share in gaming operations and ~20% in gaming sales*.* It is tough to enter the market, so Light & Wonder is well-positioned to win in the next decade. (Source: Light & Wonder) In fact, Light & Wonder posted 7 consecutive quarters of double-digit consolidated revenue growth (YoY). (Source: Light & Wonder) All in all, the company sets a target of reaching $1.4 billion in adjusted EBITDA by 2025 — or a 15% CAGR from 2022 to 2025. (Source: Light & Wonder) Bottom line: The stock is currently trading at a $9.4 billion market cap. That’s a good value if the company hits $1.4 billion by next year. If you are looking to play the growing market of gaming, this stock looks like a good buy. [EARN WHILE YOU LEARN! JOIN OUR FREE LIVE TRADING SESSION!](       © All Rights Reserved, Trade Alliance [Unsubscribe]( | [Manage Preferences](